Shared management Financial Instruments and InvestEU Member State Compartment 10 October 2019, Brussels Axel Badrichani, deputy Head of Unit, REGIO B3 Jacek Truszczynski, policy officer, ECFIN 01

Content ERDF / Cohesion Fund financial instruments – uptake during 2014- 2020 Post 2020 intervention logic for repayable support Overview of the InvestEU programme and of its MS compartment State of play Conclusions

ERDF/ Cohesion Fund FIs – uptake 2014-2020 The use of shared management FIs is progressively increasing : the total programme amount, which includes estimated national co financing, is almost EUR 25.0 billion (in 2007-2013 the final programme amount paid to FIs was EUR 15.5 billion) 85% of the planned FIs are already set-up: programme amounts for the selected FIs operations were already EUR 21.3 billion in the end of 2018 at least 33% of the planned amount (EUR 8 billion) was paid to financial instruments and 16% (EUR 3.9 billion) to final recipients 24 Member States report using FIs 8 thematic objectives – see graph

2. Post 2020 CPR intervention logic for repayable support The policy objectives defined in the partnership agreements and/or programmes can be implemented through the following delivery modes: Grants Repayable support for revenue-generating and cost-saving investments: Financial instruments under the CPR (FIs) Budgetary guarantee under InvestEU Justification for using any form of support needed!

2. FIs under shared management FIs are an implementation tool of the specific objectives of the underlying programmes For investments with revenue-generating or cost-saving potential Simplified and a more user-friendly framework – e.g.: Ex-ante assessment Combination with grants in one FI operation Eligibility, including management costs and fees Payments Financial instruments better integrated into the programming and implementation process from the outset

2. FIs under shared management Streamlined ex ante assessment: NEW! Partly covered in the programmes (grants and FIs): Market failures, investment needs and complementarity with other forms of support (Article 17(3)(a)(ii)) Justification for selecting a specific form of support (Article 17(3)(b)) NEW! For FIs only: Proposed amount/financial product/targeted final recipients, expected leverage effect, contribution to the specific objectives, need for differentiated treatment (Article 52) NEW! Possibility to use existing or updated ex-ante assessment

2. FIs under shared management Combination: In TWO separate operations: each form of support following its own rules In ONE FI operation: the grant shall be directly linked and necessary for the investment supported by the FI and shall have a lower value than the investment supported E.g. interest rate/guarantee fees subsidies, technical support, NEW!: “capital rebate” Combination of Funds with InvestEU under the CPR (type SME Initiative, ESIF/EFSI combination) not anymore possible replaced with the contribution from the Funds to InvestEU under ONE set of rules i.e. those of InvestEU

2. FIs under shared management Payments from EC to MA: In case of direct implementation by the MA: eligible expenditure incurred In case of FIs managed under the responsibility of the MA: NEW!: First payment claim: advance of 25% of amounts committed and paid to the FI; to be cleared no later than in the final accounting year and disclosed separately in the appendix to the payment application Subsequent payment claims: eligible expenditure

3. Overview of the InvestEU programme and of its Member State compartment

InvestEU Programme (2021 – 2027) InvestEU Fund: Single fund bringing together the many different EU-level financial instruments EUR 38 bn EU budgetary guarantee (EU compartment) Mobilise EUR 650 bn in additional investment across Europe Four thematic policy windows

EU compartment MS compartment Fosters EU level action and tackles EU level market gaps Consists of four policy windows Budgetary guarantee size of EUR 38bn, provisioned at 40% Guarantee is not geographically ring- fenced Fosters MS level action and tackles local level market gaps On a voluntary basis by MS can allocate amounts to provision the MS compartment from ERDF, ESF+, EMFF, EAFRD or cohesion fund Established at the level of each policy window; 1 Member State = 1 sub- compartment Based on a specific contribution agreement defining size, provisioning, contingent liability… Contributions are geographically ring- fenced InvestEU rules apply InvestEU Fund

InvestEU MS compartment: key features Partnership agreements/programmes Shared management rules EUR Union Budget InvestEU Programme InvestEU fund (EU guarantee): EU compartment & MS compartment InvestEU Regulation Max 5% Article 10 of the CPR

Why to contribute to InvestEU? Possibility to achieve the policy objectives of the contributing PA/programme and to ring-fence geographical coverage Mobilizing high volume of private finance for final recipients Implementation based on an institutional and legal framework established under the responsibility of the Commission - lower administrative burden No need for national co-financing. Contingent liability for the Member State calibrated on the basis of the risks Implementation under InvestEU rules (single set of rules) Using ready-made products currently being set up for the EU Compartment: the MS can implement such products either using its own MS compartment guarantee or to top up the EU compartment guarantee

Main Features of InvestEU MS compartment and shared management FIs FIs under shared management Policy objectives Delivery tool of the policy objectives of the underlying PA or programmes Ex-ante assessment Investment strategy to be agreed in the Contribution Agreement Mandatory obligation (including Investment strategy) Management costs and fees (MCF) No MCF paid to an IP, except in duly justified cases, decided by the EC MCF paid Financial products EU Guarantee for loans, guarantees and equity up to the risk of the provisioning rate; high leverage Loans, guarantees and equity; possibility to take more risk Payments No cash payment; IP uses its own resources Payments to the MS under shared management rules Combination Combination between EU&MS Compartment under a single set of rules possible Simple combination with shared management grants under the FI; combination with InvestEU only at the level of final recipient

Main Features of InvestEU MS compartment and shared management FIs FIs under shared management Reporting, monitoring and audit Implementation under the responsibility of the IP and EC; bi-annual reporting to MS, MS can participate in the monitoring; indirect management assurance model+ECA; Implementation under the responsibility of the MA; reporting by MS under CPR, audit by the AA, EC + ECA Resources returned if delays or no implementation Funds can come back to shared management (indicative deadlines: 4 months to sign the contribution agreement from the PA adoption; 9 months to conclude a Guarantee Agreement and 4 years to implement it) Modifications of programmes needed Reflows Reflows at the disposal of the MSs – to be used to keep the provisioning rate at the agreed level or paid back to MSs to be used for other types of repayable support National resources to be used during the eligibility period for FIs and during 8 years after the eligibility period, for FIs or any kind of support in line with the policy objectives

InvestEU Roadmap 2021 H2 2020 H1 2020 2019 InvestEU LAUNCH Adoptions & appointments Appointment of Investment Committee experts (Q4) Contractual set-up with implementing partners Stakeholder events in Brussels and in Member States (Q4) Events & consultations incl. “Getting-ready events”: seminars/consultations/working groups/meetings with Implementing Partners*, e.g. thematic events on Sustainability, Risk management, State Aid, Gender, Advisory support… 2021 Adoption of revised State Aid rules (Q4) Setting up of Advisory and Steering Board (Q4) Call for expression of interest for Implementing Partners* (Q2) Guarantee & Advisory Agreements negotiation and signature (Q3-Q4) Adoption of Investment Guidelines (Q1) & Scoreboard (Q2) H2 2020 Adoption of InvestEU Regulation** (Q4) H1 2020 *Implementing Partners (IPs) = EIB Group and +/- 30 national and multinational potential partners **Subject to adoption of MFF 2019

InvestEU MS compartment: organization

4. State of play CPR to be adopted by end 2020 Partnership agreements/programmes to be adopted in 2021 (draft expected early 2020) On-going technical meetings with MAs National authorities to assess the features of shared management FIs/InvestEU and benefit from complementarities

5. Conclusion Decision on the Investment priorities Consider continuing with shared management FIs Look at the new opportunities under InvestEU from the programming stage Prepare to contribute early - at the level of Partnership agreement Liaise with your NPB and with the EIB Group DG REGIO would be closely involved also in the negotiations on the Contribution Agreement If you have questions we are available to support you!